General Motors and Ford Motor Co. are churning out SUVs and crossovers as fast as they can to keep up with surging demand, but weak sales of their car models could endanger their chances of gaining U.S. market share this year.
GM posted a 21 percent increase in light trucks in February, but a 21 percent drop in car volume kept its overall growth below the industry average. Ford was one of the only automakers to report a year-over-year decline last month, hurt by 8.1 percent lower sales for a car lineup that it worked for years to transform from a liability into a strength.
Consequently, both companies lost share in a month that came in short of expectations. Customer traffic dwindled amid frigid, snowy weather in late February, but automakers and analysts expressed confidence that the industry remains on track toward a potential 17 million unit year. U.S. sales rose 5.3 percent in February and are up 9.2 percent so far in 2015.
Mark LaNeve, Ford's new U.S. sales and marketing chief, said he sees "big opportunity" for cars such as the Ford Focus, which posted a 12 percent drop in February, and the Fiesta, which was down 24 percent. He said Ford intends to take a stronger approach to its cars in March and April.
"We don't want to buy the business," LaNeve said on a conference call last week. "We want to earn the business the right way, with product excellence and a great customer experience. It's God's work. We're working on it all the time to get the right message in the marketplace."
Meanwhile, GM has redesigns of its top-selling cars, the Chevrolet Malibu and Cruze, on the way, but it will have to get through most or all of this year with the outgoing models. The Malibu, in particular, has been a drag on GM; it sold 10,251 fewer Malibus last year than in 2010, even though the U.S. market grew by nearly 5 million vehicles over the same period.
GM spokesman Jim Cain said the improving economy and job market are leading people to "buy what they want, which are trucks, SUVs and crossovers. We're better positioned there than anybody else."
He also said incentive activity has heated up in many car segments, especially among Asian brands, and GM has "been very restrained on incentive spending" on older vehicles, including the Cruze and Malibu, to protect residuals and brand health.
"Some of our car-based competitors are reacting to this market in ways we don't think are necessarily healthy for long-term brand and customer value," Cain said.
Akshay Anand, an analyst with Kelley Blue Book, said those incentive battles cooled somewhat in February, with discounts on the newly freshened Toyota Camry averaging less than $2,500 per car this year, down from about $3,100 in 2014.
Lower gasoline prices and longer loan terms -- which help consumers buy pricier vehicles -- have made sedans less popular, but Anand said the Detroit 3 mustn't ignore their cars again, as they did when SUVs originally took the market by storm.
"They're always going to be more focused on SUVs and trucks," he said. "But you need a full lineup because you want to keep people within your brand no matter what."
Across the industry, car sales fell 1.4 percent in February. But excluding GM and Ford, cars were up 3.5 percent.
Overall sales were about 30,000 units short of analysts' estimates, a number they said could easily be made up as the weather warms. The seasonally adjusted, annualized selling rate slipped to 16.2 million in February, down from 16.7 million in January. Nonetheless, 17 million units for the year, a mark last hit in 2001, remains within reach, Morgan Stanley analyst Adam Jonas said in a report last week.
"Jumping forward to spring, we expect to see even more accommodative/competitive financing and leasing instruments driving U.S. auto sales back to fresh cyclical highs of 17 million or more," Jonas wrote. "Moreover, given the unrelenting additions to light-vehicle capacity coupled with the U.S. dollar strength, we are confident this industry will find a way to achieve record high SAAR levels one way or another."
Mike Colias contributed to this report.